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Taiwan: Obstacles to patent invalidity decisions

18-12-2015

Crystal Chen and Jesse Peng

Patent invalidity can be raised as a defence in civil proceedings. If a civil court invalidates the patent at issue, the patentee loses the ground against the opposing party at that very civil proceeding. However, such a patent invalidation issued by the civil court applies only to each particular case.

The patent at issue is still valid unless it is invalidated in a separate action by the Taiwan Intellectual Property Office (TIPO) or, in an appeal, by the administrative court. A patent invalidated by the administrative court will be cancelled and be deemed as ‘non-existent from the beginning’. This is the so-called ‘bifurcated system’ of patent invalidation.

Such a system creates a potential conflict between civil and administrative judgments, especially when the administrative court invalidates a patent after a final civil judgment has rendered that the patent has been infringed. If the civil court has already rendered its final judgment on infringement and awarded damages, it must be determined whether the defendant can request for a retrial based on the administrative court’s final and binding judgment of patent invalidity.

IP Court’s opinion

In a recent retrial judgment, the Taiwan IP Court rejected a petition for retrial after administrative invalidation of patent. The court has reasoned that: “The civil final judgment is rendered based on the supporting evidence available in the first instance at the discretion of the civil court empowered by the Intellectual Property Case Adjudication Act (CIPAA).

"Since patent infringement is determined based on the validity of the patent, patent validity should be the grounds on which the civil final judgment is entered."

“Granting a retrial based on an altered opinion of a subsequent administrative judgment on the validity of the patent at issue will compromise the stability of the law. Moreover, regarding foreign example(s) such as Japan, retrial is not granted in such circumstances. If the defendant did not raise the patent invalidity defence in prior proceedings, the defendant will then lose the right to challenge the final judgment based on patent invalidity.”

Supreme Court’s opinion

After appeal, the Taiwan Supreme Court revoked the judgment and remanded the case back to the IP court.

The Supreme Court reiterated the grounds for retrial and said that, according to article 496 of the Taiwan Code of Civil Procedure, a retrial action may be initiated to request a review of a final judgment if the referenced administrative disposition, based on which the judgment is entered, is altered by a subsequent final decision or administrative disposition.

Since patent infringement is determined based on the validity of the patent, patent validity should be the grounds on which the civil final judgment is entered. If the patent is later declared to be invalid by the administrative court, the administrative judgment/disposition of granting the patent to the patentee will be revoked and the patent will be deemed as non-existent from the beginning. The grounds of the final judgment have therefore been altered.

The Supreme Court found that the defendant’s raising of a patent invalidity challenge in the second instance was immediately dismissed by the IP court without substantive review simply because the same challenge was absent in the first instance. The Supreme Court held that the IP Court’s holding that “the court determined the patent validity at its own discretion rather than relying on the administrative disposition of patent grant” was made in error.

The Supreme Court’s decision becomes more persuasive when it is rendered on the basic idea that there will not be any infringement if the patent at issue is not valid. Request for a retrial under such circumstances is firmly based on article 496.

Concerning public interest, if a patent is later declared to be invalid, it is more justifiable to demand the patentee to return awarded damages which were gained owing to the previous enforcement of such an invalid patent.

The Supreme Court’s opinion is consistent with the idea of the bifurcated system in that a civil court’s declaration of patent invalidity is merely binding on the particular patent infringement case. The validity of a patent right should be subject to the jurisdiction of TIPO or, if applicable, the administrative court.  

Crystal Chen is a partner and attorney at law at Tsai, Lee & Chen. She can be contacted at: cjchen@tsailee.com.tw  

Jesse Peng is a partner and patent attorney at Tsai, Lee & Chen. He can be contacted at: info@tsailee.com.tw

Crystal Chen, Jesse Peng, patent invalidity, IP court, civil court, Taiwan Supreme Court, patent, CIPAA, Taiwan Intellectual Property Office, TIPO,

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